While pending sales of middle- and upper-price homes have fallen recently, pending sales of starter homes climbed 10.2% year-over-year in July, signaling signs of life in the first-time-homebuyer category. This increase is the highest level of pending sales for the starter home segment since October 2022, according to a Redfin report.

Pending sales of middle-price homes – those in the 35th to 65th percentile of the market – fell 6.5% in July compared with last year, the report found. Pending sales in the upper-price category – 65th to 95th percentile – fell more than 10% year-over-year.

Redfin speculated that starter home sales are strengthening on the recent decline in mortgage rates as first-time homebuyers are less likely to have a large down payment, making them more sensitive to rates that will impact monthly payments.